Ferguson Posts $9.03 Billion Q3 Sales, Raises 2026 Outlook

Ferguson Enterprises reported third-quarter sales of $9.03 billion, up 9.5% year over year, and raised its calendar 2026 sales growth guidance from mid-single-digit growth to approximately 7%. The quarter, ended September 30, 2026, combined organic momentum with an aggressive acquisition run that has now reshaped the balance sheet.

Organic sales grew 7%, and acquisitions added another 2.7 percentage points. Operating profit came in at $885 million, up 4.9%, while adjusted operating profit rose 8.9% to $962 million.

The margin picture was mixed. Gross margin slipped 40 basis points to 30.9%, and reported operating margin fell to 9.8% from 10.2% a year earlier. Adjusted operating margin held flat at 10.7%.

Reported diluted EPS dropped 4.9% to $3.08, against $3.24 in the prior-year quarter. Adjusted diluted EPS moved the other way, gaining 7.9% to reach $3.43 on the back of higher adjusted operating profit.

Where is the growth coming from?

The U.S. business carried the quarter. Sales climbed 10.2% year over year. Non-residential sales jumped 15%, powered by large capital projects, healthy bidding activity, and demand for specialized solutions. Residential sales still grew 6% despite continued weakness in new construction and repair, maintenance, and improvement activity.

Canada told a different story. Sales there fell 4.5%, reflecting divestments and unfavorable foreign exchange movements.

CEO Kevin Murphy credited the front line: "Our expert associates delivered strong third quarter results, with non-residential sales up 15% and residential growth of 6%. We continue to invest organically and through acquisitions to expand our value-added solutions and geographic footprint. We have completed eleven acquisitions this year with an aggregate annualized revenue of approximately $1.5 billion, while preserving a strong balance sheet."

How much is M&A driving the numbers?

A lot. Ferguson completed three acquisitions during the quarter — FloWorks, Brax Company, and Rogers Supply Company — and followed up after the quarter closed with Canyon Systems, which expands its water and wastewater treatment capabilities.

The company deployed $1.7 billion on acquisitions in the third quarter alone, with FloWorks the centerpiece, alongside $108 million in capital expenditures. That spending pushed net debt to adjusted EBITDA to 1.7 times, up from 1.0 times a year earlier.

For the first nine months of 2026, Ferguson generated $25.25 billion in sales, up 6%. Adjusted operating profit rose 6.5% to $2.54 billion, and adjusted EBITDA reached $2.73 billion, a 6.9% increase.

The one-line takeaway: Ferguson is buying growth at a pace of roughly one deal a month, and it's willing to lever up modestly to do it.

What does the raised guidance say?

Management now expects approximately 7% calendar 2026 sales growth, up from mid-single digits, citing year-to-date performance and FloWorks' contribution. Ferguson also raised the lower end of its adjusted operating margin outlook to a range of 9.6% to 9.8%, versus the prior 9.5% to 9.8%.

The updated outlook bakes in approximately $235 million in interest expense and $425 million in capital expenditures.

Murphy acknowledged the uneven backdrop while pointing to structural demand: "While our markets remain mixed, our year-to-date performance and the addition of FloWorks enable us to raise our full year guidance. We expect to continue delivering market outperformance by deploying scale locally and leveraging the long-term growth drivers of water infrastructure, large capital projects, climate and comfort and aging and underbuilt housing. We remain confident in our ability to capitalize on these growth drivers as we provide essential water and air solutions for the complex project needs of the specialized professional."

Shareholders also got a payout. Ferguson declared a quarterly dividend of $0.89 per share, payable January 8, 2027, to shareholders of record as of November 20, 2026.

The bet from here: if non-residential demand holds and leverage stays near 1.7 times, the 11-deal spree converts into durable market share rather than integration drag.